IDEAS home Printed from https://ideas.repec.org/a/ags/aareaj/292458.html

Elicitation of irrigators’ risk preferences from observed behaviour

Author

Listed:
  • Nauges, Celine
  • Wheeler, Sarah Ann
  • Zuo, Alec

Abstract

Water trading in the Murray–Darling Basin of Australia has developed to the point where it is a common adaptation tool used by irrigators, making it an apt case study to elicit the marginal value of irrigation water and irrigators’ risk preferences in two key industries with differing levels of water dependence. Our data come from large-scale and representative surveys of irrigated broadacre and horticultural farms in the Murray–Darling Basin over a 6-year period. The marginal contribution of irrigation water to profit is estimated at $547 and $61/ML on average in horticulture and broadacre, respectively. Horticultural irrigators are found to be averse to the risk of large losses (downside risk) while broadacre irrigators are averse to the variability (variance) of profit.

Suggested Citation

  • Nauges, Celine & Wheeler, Sarah Ann & Zuo, Alec, 2016. "Elicitation of irrigators’ risk preferences from observed behaviour," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 60(3), July.
    • Handle: RePEc:ags:aareaj:292458
    DOI: 10.22004/ag.econ.292458
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/292458/files/ajar12134.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.292458?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guerrero-Baena, M. Dolores & Villanueva, Anastasio J. & Gómez-Limón, José A. & Glenk, Klaus, 2019. "Willingness to pay for improved irrigation water supply reliability: An approach based on probability density functions," Agricultural Water Management, Elsevier, vol. 217(C), pages 11-22.
    2. Bozzola, Martina & DiFalco, Salvatore & Finger, Robert, "undated". "Time variant risk preferences in agriculture: evidences from Italy," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258365, Agricultural and Applied Economics Association.
    3. Zuo, Alec & Qiu, Feng & Wheeler, Sarah Ann, 2019. "Examining volatility dynamics, spillovers and government water recovery in Murray-Darling Basin water markets," Resource and Energy Economics, Elsevier, vol. 58(C).
    4. Sarah Ann Wheeler & Céline Nauges & Alec Zuo, 2021. "How stable are Australian farmers’ climate change risk perceptions? New evidence of the feedback loop between risk perceptions and behaviour," Post-Print hal-03198062, HAL.
    5. Sarah Ann Wheeler & Céline Nauges & R. Quentin Grafton, 2025. "Water pricing and markets: Principles, practices and proposals," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 47(2), pages 487-514, May.
    6. Wheeler, Sarah Ann, 2022. "Debunking Murray-Darling Basin water trade myths," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(04), January.
    7. Delorit, Justin D. & Parker, Dominic P. & Block, Paul J., 2019. "An agro-economic approach to framing perennial farm-scale water resources demand management for water rights markets," Agricultural Water Management, Elsevier, vol. 218(C), pages 68-81.
    8. Wheeler, Sarah Ann & Marning, Angelika, 2019. "Turning water into wine: Exploring water security perceptions and adaptation behaviour amongst conventional, organic and biodynamic grape growers," Land Use Policy, Elsevier, vol. 82(C), pages 528-537.
    9. R. Quentin Grafton & James Horne & Sarah Ann Wheeler, 2016. "On the Marketisation of Water: Evidence from the Murray-Darling Basin, Australia," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 30(3), pages 913-926, February.
    10. Sarah Ann Wheeler & Alec Zuo, 2017. "The impact of drought and water scarcity on irrigator farm exit intentions in the Murray–Darling Basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 61(3), pages 404-421, July.
    11. Sarah Wheeler & Céline Nauges & R. Quentin Grafton, 2025. "Water pricing and markets : Principles, practices and proposals," Post-Print hal-05143769, HAL.
    12. David Adamson & Adam Loch & Kurt Schwabe, 2017. "Adaptation responses to increasing drought frequency," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 61(3), pages 385-403, July.
    13. Zuo, Alec & Wheeler, Sarah Ann & Xu, Ying, 2022. "Expanders, diversifiers or downsizers? Identifying clusters of irrigators’ water trade and farm management strategies in Australia," Agricultural Water Management, Elsevier, vol. 264(C).
    14. Abebe, Fentahun & Zuo, Alec & Wheeler, Sarah Ann & Bjornlund, Henning & Chilundo, Mario & Kissoly, Luitfred & Dube, Thabani, 2022. "The influences on farmers' planned and actual farm adaptation decisions: Evidence from small-scale irrigation schemes in South-Eastern Africa," Ecological Economics, Elsevier, vol. 202(C).

    More about this item

    Keywords

    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aareaj:292458. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.